Clean Power Finance, a San Francisco-based software company that helps independent solar installers offer financing to home- owners, has raised $25 million. The round was led by new investors Kleiner Perkins Caufield & Byers and Google (GOOG) Ventures.
The company also announced that Robert “Nat” Kreamer, one of the founders of competitor SunRun, is Clean Power Finance’s new CEO. Kreamer, a reserve officer in the Navy who served in Afghanistan, has been quietly working with Clean Power Finance in that capacity for months.
California’s rooftop solar industry has enjoyed a big boost in recent years from new financing arrangements — from leases to “power purchase agreements” — that make it possible for individuals and businesses to go solar with little or no money down.
SolarCity, SunRun and Sungevity — all Bay Area startups — have made names for themselves by bringing affordable solar to the masses, and each company has grown rapidly and expanded beyond California.
Clean Power Finance offers solar financing through solar installers rather than directly to residential or commercial building owners. And instead of creating a consumer brand, it focuses on the untapped business-to-business market and basically acts as the middle man between installers and investors.
It works with a variety of undisclosed lenders and is in the process of creating dedicated tax equity funds to finance solar installations. Several leading banks have already created similar funds with companies like SolarCity and SunRun, and in June, Google announced a $280 million fund for residential solar projects with SolarCity.
“When I look at the opportunity, I have to pinch myself,” Kreamer said. “This opens up the market for solar financing to installers and lets their brand be first.”
One Clean Power client is Barry Wardak, owner of California Solar Systems, a medium-size solar installer that has offices in Emeryville and Fullerton and usually completes about 140 installations a year, mostly in Orange and Riverside counties. Wardak said his business struggled last year because many homeowners who wanted solar panels couldn’t find affordable financing.
“We didn’t have our own in-house financing, so we’d have to refer people to outside lenders,” Wardak said. “But a lot of people didn’t have enough equity in their houses to qualify.”
Clean Power Finance primarily uses credit scores of 700 or above when assessing a homeowner’s ability to qualify for leases or power purchase agreements.
Wardak began working with Clean Power Finance four months ago, a move he described as key to growing his business. Clean Power Finance makes money by getting a cut of each transaction, but Wardak is able to pitch home-owners directly on a lease.
“Every one of our customers opts for the financing,” Wardak said. “The nice thing is that Clean Power Finance stays in the background and lets us do the work — they don’t try to claim our customers as their own.”
Contact Dana Hull at 408-920-2706.
